The Sentimeter: 9.8.13
The Sentimeter remains in neutral territory. The "dumb money" has turned extremely bearish and this is a bull signal. However, the Rydex market timers remain bullish for the most part. Corporate insiders (i.e., the "smart money") is neutral. When you put it all together, it is a neutral sentiment reading.
At this stage of the market cycle, there is unlikely going to be consensus amongst the indicators. We have had a shallow dip that has turned the "dumb money" bearish. Such shallow dips will lead to marginal new highs at best. It has been nearly 2 years since the last "real" bull signal when investors were extremely bearish. Over the past 2 years, any modest selling has been met with either the introduction of a new Federal Reserve asset purchasing program or the proclamation (i.e., jawboning) that asset purchases will continue essentially forever. The market needs to clear itself of the weak hands, and the best way to accomplish this is selling. Anything short of this will lead to the same old thing.
See the Equity Market Investor Sentimeter below, which is our most comprehensive sentiment indicator. This indicator is constructed from 10 different data series including opinion data (i.e., how do you feel about the market?) as well as money flow data (i.e., where is the money going?). This is the current state of equity market investor sentiment.
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